December 31, 2002 Interest Rate Update

The immediate interest rate for valuing lump sum payments for the month of January 2003 is 4.00%. The deferred interest rate I1 is 4.00%, I2 is 4.00%, and I3 is 4.00%. (The immediate interest rate for December 2002 was 4.00% for lump sum payments; the deferred interest rate I1 was 4.00%, I2 was 4.00%, and I3 was 4.00%.)

On March 27, 2002, the Internal Revenue Service in Notice 2002-26 announced that it had determined the rate of interest on 30-year Treasury securities for February 2002 and that it would determine and publish the rate of interest on 30-year Treasury securities for succeeding months pending enactment of legislative changes that address the discontinuace of 30-year Treasury securities. The PBGC has concluded that it is appropriate to use the February rate announced in Notice 2002-26, and future rates determined in the manner described in that notice in setting the required interest rate for purposes of calculating the variable rate premium.

The required interest rate for determining the variable rate premium amount for premium payment years commencing in December 2002 is 4.96%. (The required rate for November 2002 was 4.93%.)

The select and ultimate interest rates for valuing annuity benefits in single-employer plans and multiemployer plans for the month of January 2003 are 5.30% for the first 20 years following the date of plan termination and 5.25% thereafter, respectively. (The select interest rate for December 2002 was 5.30% for the first 25 years and the ultimate rate was 4.25%.)

The interest rate that PBGC will charge on employer liability, unpaid contributions, and unpaid premiums, for the calendar quarter beginning January 1, and ending March 31, 2003, is 5%. (The interest rate for October 1 to December 31, 2002 was 6%.)

The interest rate to be charged by multiemployer pension plans on withdrawal liability payments that are overdue or in default, or that is to be credited by such plans on overpayments of withdrawal liability during the calendar quarter beginning January 1, and ending March 31, 2003, is 4.25%. (The interest rate for October 1 to December 31, 2002 was 4.75%.)